Hong Kong asset manager Value Partners' profit rebounds in first half

Hong Kong asset manager Value Partners Group’s net profit rebounded 29.1% year-on-year to HK$250.9 million (US$32.2 million) in the first half of 2019, driven by its China business, but the company earned less from management fees than in July-December 2018.

Profits bounced back after falling 11.5% to HK$194.3 million in the first six months of 2018.

The company had $18.1 billion of assets under management at the end of June, a 20.1% increase from $15 billion at the end of 2018.

In a statement on August 19, Value Partners attributes the higher profits and assets primarily to “breakthroughs and accelerating growth” of its China business. The company says its China-related assets rose more than 35% from the end of last year to $1.5 billion, or 8% of its total assets.

Value Partners’ President Au King Lun, who was previously the chief executive officer, says in the statement that the company has made “further progress” in China with the launch of the Flagship Class Fund, its first public fund on the Mainland.

The fund invests in Asia Pacific markets. It was launched this March under a mutual recognition fund distribution scheme between Hong Kong and China.

Value Partners earned HK$679.5 million in management fees in the first half of 2019, down 4.64% from HK$712.9 million in the six months to December 2018.

According to a company spokesperson, the annualised gross management fee margin “remained relatively stable” at 103 basis points.

A Taiwan-based securities analyst says Value Partners’ results are in line with market expectations.

“The company recorded declining management fees and its performance fee was zero, which is a reflection of the market condition. But its average performance was not far below the high-water mark; we may see some improvements in the performance fee going forward,” he tells AAM, speaking on condition of anonymity.

According to Patrick Shum, director of investment management at Hong Kong-based Tengard Fund Management, Value Partners’ recent management restructuring could have a mixed impact on its operations.

Value Partners said last month that the functions of a chief executive will be handled by a leadership committee following Dr. Au’s retirement as CEO and executive director. The committee currently comprises Value Partners’ co-chairmen and co-chief investment officers Cheah Cheng Hye and Louis So, and Dr. Au.

“The company can consider different opinions if its top decision is made by a committee. However, it may slow down the process if the committee members hold opposite views,” Mr. Shum tells AAM.

The Value Partners spokesperson says the senior management reshuffle “was taking place as part of succession planning efforts of the Group”, but declines to comment further.